SEOUL, S.KOREA: Samsung Electronics, the world's No.1 memory chipmaker, warned of weaker margins and profit growth after posting record quarterly earnings, as prices of chips and flat screens drop and smartphone competition grows.

Samsung's net profit in April-June was at an all-time high of 4.28 trillion won (3.6 billion dollars), up 83 per cent compared to the year-ago quarter. Operating profit rose 88 per cent to 5.01 trillion won, while revenue rose 17 per cent to 37.89 trillion won.

However, investors are worried if Samsung will be able to match analysts' forecasts of another record profit this current quarter due to an uncertain demand outlook for handsets and TVs amid a fragile global economic recovery.

The world's top TVs and LCD flat screens maker said it would pay an interim dividend of 5,000 won versus 500 won a year ago, adding the jump in payout was due to a re-allocation of the total dividend for the full year.

Shares in Samsung, Asia's most valuable technology company with a market value of $113 billion, fell 1.7 percent by 0102 GMT, versus a 0.5 percent decline in the broader index .KS11.

"There is some concern on television sales in the second half. Like LG Electronics, decreasing demand in the TV and PC businesses will be a problem in the coming quarters," said Kim Young-chan, an analyst at Shinhan Investment Corp.

Samsung trails Nokia in mobile phones, competes with Sony Corp in flat-screen TVs, LG Display in flat screens, and Toshiba and Hynix in semiconductors.

The world's No.2 handset maker reported 5.01 trillion won ($4.23 billion) in operating profit in April-June, beating a consensus forecast for a 4.86 trillion won profit by 20 analysts from Thomson Reuters I/B/E/S.

The result in line with the median estimate of 5.0 trillion won in a range of 4.8 trillion and 5.2 trillion won given by Samsung earlier this month.

"With intensified competition throughout the digital media and mobile industries going forward, it may become a challenge to maintain current profitability levels," Samsung said in a statement. It said third quarter profit margins could be hurt by price competition in its handset business.

Second quarter profit almost doubled from 2.67 trillion won a year earlier and topped the previous record of 4.4 trillion won in the first quarter.

Samsung sold 63.8 mobile phones in the second quarter, down from 64.3 million units sold in the previous quarter, and telecom division margins slumped to 7.2 percent, as it boosted marketing spending in the absence of a strong model to claw back share in the lucrative smartphone market.